×

Why this 'Shark Tank' winner makes his children pay rent

Craig Sjodin/ Disney ABC Television Group/ Getty Images

Aaron Krause, founder of sponge company Scrub Daddy, has seen massive success since landing an investment on ABC's "Shark Tank" in 2012.

After Lori Greiner, QVC and retail mogul, offered Krause $200,000 for a 25 percent stake, Scrub Daddy has racked up more than $110 million in cumulative sales and has since launched a range of other products across retailers nationwide.

But despite the success, or perhaps because of it, he wants his two pre-teen kids to know the value of hard work.

That's why he plans on making his son and his daughter, twins who are both 11-years-old, "pay" rent.

"I constantly tell my children that they don't live in my house for free," Krause tells CNBC Make It. "That there's rent to be paid."

Krause's kids, Bryce and Sophie, earn their keep by doing chores such as feeding the cat, cleaning the litter box, making their beds and washing the cars.

It teaches them hard work, the entrepreneur says, and helps them "understand the fact that living isn't free."

"When they get to be 12 or 13 we'll start making an allowance," Krause says. "And the allowance will be earned."

His wife Stephanie runs the company's communications.

Some parents may disagree with the parenting strategy, but Krause says that from experience, it works. His father used to do the same thing.

"Both my parents had a very specific way of parenting and I credit them with most of my business acumen," he says.

From the time Krause was 10 years old, each birthday would mark more financial responsibility for him. One birthday, his father told him that from then on he would have to "buy" his own. The next year, it would be his undergarments or another item.

To "buy" these things for himself as a kid, Krause had to do chores. Making his bed was worth $2, vacuuming his room was worth about $5 and washing the car was worth $10.

"I became an expert car washer," he says, laughing.

Aaron Krause
Adam Jeffery | CNBC
Aaron Krause

"It was washing cars that gave me so much business experience," he says, "followed by the fact that I invented a buffing pad while I was in the car washing industry."

The strategy also taught him the value of money.

"That's what I'll be teaching my kids, that it's important to make money," he says, "to earn your own money, to have respect for that money."

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

More from iCONIC:

MailChimp CEO: This realization is essential to your success

'Shark Tank' investor shares the No. 1 lesson he learned from 'Think and Grow Rich